Prospects for Commodity Exporters: Hunky Dory or Humpty Dumpty?

Abstract

Those low-income countries that export non-agricultural commodities are in the midst of a resource transfer. It is undoubtedly the biggest opportunity for transformative development that these societies have experienced, dwarfing both aid and previous commodity booms. To get it in proportion, in 2004 commodity exports from Sub-Saharan Africa accounted for 146 billion US dollars or 28 percent of the region's GDP, while aid amounted to 5 percent of GDP. Compared with the boom of the 1970s many more countries are beneficiaries: the push to diversify sources of supply has resulted in exploitable discoveries in places that were previously political no-go areas. Further, whereas the boom of the 1970s was conjured up by the OPEC cartel, this one is grounded in Asian growth and so is intrinsically less precarious. In this paper, the authors draw on a range of new research that provides a prognosis of prospects, a diagnostic of likely problems, and prescribes an agenda for international action. The paper is organized around these three objectives.